tv Market Makers Bloomberg June 18, 2015 8:00am-10:01am EDT
-- this is "market makers." janet yellen's signs. we will hear from jack welch. the former ge out vonnie: ceo joins us later. matt: time for the top stories. olivia: police have released pictures of a white man there's a shot and killed nine people at a historically black church last night. he's described as being between 21 and 25 years old. the police chief kills the killings a hate crime has asked for the public's help in washington. >> we are bringing in resources from washington to help us. we set up a hotline. we have agents and police officers manning that phone.
olivia: one of the victims was the church's pastor. the shooter attended a prayer meeting at the church for a list now or before opening fire. president obama gets a chance to revive his trade agenda today. the proposal was defeated last week with members of the president's own party leading the way. the asian trade you would hurt american workers but republican leaders are reworking the proposal to be democrats on their side. matt: pope francis has issued his statement on the environment today. the pope called for a radical change in lifestyle, politics and economics. he placed most of the blame on fossil fuels. the statement was criticized by conservatives. shares of oracle are lower in
premarket trading. oracle was hurt by currency fluctuations and customers moving to more cloud-based computing. oracle has been overhauling its products to take advantage of the shift to the cloud. reports that lester holt will become the permanent anchor for nbc's nightly news. he replaced brian williams four months ago. limbs was suspended for exaggerating his role during an attack on a helicopter in iraq. -- williams was suspended. he will stay with the network. he will move to cable channel and msnbc. olivia: let's get you started with the top five things you need to know about this morning. matt: we will start with the fed. it was a juggle here. there are some other issues today. the fed issued the following statement in a news conference
saying it's going to downgraded spew up the economy but still normalize interest rates. wall street economists are trading places on when the central bank will raise interest rates. the group provides its forecast for september. goldman sachs sing and anticipates liftoff at the end of the year. olivia: a lot of investors were watching. they thought she was dovish. yields came down as janet yellen was speaking. my take away is that two hikes are most likely. matt: let's get to greece. olivia: christine lagarde speaking in the past hour. she is meeting with others in luxembourg.
's nichols is on the ground in luxembourg with the latest. hans: what we got from edible guard was clarity. no grace period beyond the june deadline. she used the word "default." -- what we got from madame li lagardere was clarity. pension reform was not going to happen. christine lagarde is insisting on pension reform. angela merkel gave a speech this morning, saying yes, there still a possibility, they're looking for ways. she said her usual comments on how thei when there's a will there's a way.
she did not say that a departure from greece would absolutely be a rupture to the eurozone, to the economy. privately, there's a lot of conversation a about what different countries are doing to contain the contagion. olivia: thank you so much. we will have more from hans drought the show -- throughout the show. julie: the big ipo that priced last night. we are talking about that bit. it raised $372 million, placing shares at $20 apiece. the size of the ipo on tuesday amid stronger-than-expected demand. even at the 17-19 dollar range,
it was still more expensive than a stock like apple. olivia: thank you so much. olivia: only about a $4 billion valuation. olivia: you know what's worth $24 billion? caribbean be in talks to raise financing at a valuation of $24 billion. -- air b&b. they're projecting 2015 revenue of about $900 million. that's up from $250 million in 2013. matt: that's the reason why. olivia: that is huge. isn't this a company with major regulatory hurdles in front of them? matt: uber has massive regulatory hurdles and it's still worth $40 billion. olivia: a lot more people are
using uber than airbnb. $24 billion? matt: number five is the u.s. treasury, planning to feature a woman on its currency notes or the first time since w martha washington. there was the susan b anthony dollar as well. it's soliciting public comments and will decide by the end of this year -- i was thinking aviation pioneer amelia a heart. -- amelia ehrhardt. olivia: i was thinking rosa parks. it has to be a woman who embodies inclusive democracy. you know where he got the idea? a nine-year-old girl from massachusetts wrote to president obama last year and he said that sounds like a pretty good idea. i will say the $10 bill is the least circulated bill.
matt: one i rarely use per alexander hamilton is one of the most important figures in u.s. history. olivia: there will still be $10 bills with alexander hamilton. matt: turning back to fed policy , i want to get our own economists take on the fomc statement. josh wright and our team saved the most important new information came from the. dot plot. similar to what was signaled in march. the fed remains data dependent. it appears to be increasingly comfortable that a notion of a modest increase. wasn't that always the plan? projections as low as five basis points.
clearly, the market expects the fed to remain fairly tame. >> it was about the dot plot yesterday. there were not any big surprises. the market really focused on where so many of those dots came down. a lot of us were surprised or interested to see that the fed held so firm to its view that is likely to be to rate hikes this year. matt: a good-looking dot plot. i like the forward years. the fed itself will say it doesn't have much faith in such forward guidance. olivia: it looks like battleship. it's in the trajectory of rate rises. more gradual than we previously thought. one thing i want to ask you about -- matt: it's amazing how much janet yellen precipitates this by saying exactly what we are
extrapolating now every single time she speaks. josh: a candidate for getting onto the $10 bill. she is in charge here. olivia: it has to be a woman who passed away. it cannot be a living person. janet yellen cited that strength of the dollar. do you think she is trying to talk down the strength of the currency? is that why we saw her not as upbeat as some expected? josh: i don't think she was overly focused on the dollar. she said the dollar is one of many factors we look at. she stuck to her script, focusing on the fact that passed rate moves is more important than the initial data liftoff. she did not vary too much from that. i think she got what she wanted. there are number of economists changing their views or considering changing their views.
that's what the fed wants because they are data dependent. different people are looking at the same data and will come to different conclusions. the fed has to be concerned about one-sided markets. that's what led to the temper tantrum. -- paper tantrum -- taper tantrum. the data will lead to a healthy two-sided market and you are less likely to have extreme reaction. matt: thank you very much for joining us. olivia: up next, we will remember jimmy lee with jack welch, who was a mentor to jimmy lee. ♪
olivia: the death of james lee shocked wall street yesterday. he was considered by many a master dealmaker, father of the modern day syndication loan market and a formidable competitor. for many others, he was much more. bill cohen joins us live. describe the gym you know. -- jimmy you knew. bill: it is still a bit shocking to process the fact that he is not here anymore. he was a force of nature. when he had a deal in his sights , there was no one else more you wanted on your side. people on wall street talk about bringing the whole organization to you.
jimmy lee was the only person who could actually deliver the firm. it wasn't like he had done any credit analysis or anything. if steve schwarzman came calling and said i want to do x, y, z big deal jimmy would say you are done and he bends the organization around his will until it got done. matt: he was monumental in the birth of lbo's. we know he was a force behind j.p. morgan chase. what about jimmy lee as a person? you described him as old school. he reminded you of the warden from the shawshank redemption. what was it like to have him -- bill: this is such a personal thing. matt: that's the most interesting thing right now. bill: i saw him in april.
last year -- he's a big williams college alum. my two sons go to william. i was out playing golf with my two sons last year and jimmy was there with his family. we ran into each other at the end. my parents were there, tubing. my father was playing with us. -- my parents were there, too. it was this incredibly warm embrace. i had my ups and downs with jimmy. he was a tough boss. that was all years ago. we had become good friends. a great person to talk to about wall street. seeing him at the end of that and the big embrace and introducing him to my parents, it was great. matt: i want to bring in another great person to talk to about wall street events and someone who knew jimmy lee closely and
personally. jack welch joins us on the phone right now. jimmy cited u.s. giving him the best career advice he has ever gotten. talk to us about what he was like as a person. jack: good morning. i absolutely -- bill capture just about everything about jimmy. my phone rang all afternoon with everybody wanted to talk about jimmy. 15-17 calls with people wanting to talk about their best friend, jimmy. it is such a shock you almost can't believe it. he was a force of nature. when he wanted to get a deal done, he got it done. you knew when you were in a handshake with him, he would deliver the bank.
he was a guy who likes to gossip he was a regular guy, a real guy. i enjoyed having dinner with them, enjoyed hanging out with them him. he was so much more than investment banker -- an investment banker. my grandson is now a freshman at williams. i made with jimmy when my grandson became a freshman at williams. bill: i had the same expense. i finally made it with jimmy. until my kids were williams college in rowley's, i had not made it with them. -- inenrollees, i had not
made it with him. olivia: he was always trying -- he could have picked up his feet and enjoyed his life. he prioritized his family as well. what do you think cap to motivated? jack: an intense desire to prove himself. jimmy with all his stuff -- was he a big leaguer enough? he always wanted to prove he was really good. despite all of the recognition he had an success he had it was never something he quite believed about himself. bill: it went back to his desk -- being adopted by the alans.
he was on a mission, a man on a mission. in the nicest way. jack: the best way possible. matt: there are few of his kind left on wall street. he was old school. he wore suspenders. he wanted to do the deal for the sake of the client and do it well. do you think he is one of the last of a breed? jack: i don't know. he was one-of-a-kind, no question about that. he was more one-of-a-kind. he's a guy that you can't believe what he would do to get a deal done. he would move a firm, move walls. we were doing a deal in private equity and rubenstein was involved, too bank. -- too.
olivia: with a june 30 deadline looming alexis tsipras once again on the move. he landed in russia a few hours ago to meet with vladimir putin. a major economic gathering in st. petersburg. joining me with more is ryan chilcote. what is he doing in russia? ryan: we don't know all the reasons why he is here. one of the reasons, to talk gas.
most of that gas gets from russia to western europe through ukraine which russia is not happy about because it's in a serious conflict. they had a backup plan to go through bulgaria. that was stopped by the european union. they have a new plan where they would build a pipeline in turkey and from turkey to greece. greece gets to become another hub an entry point for russian gas in europe. they get transit fees and might get a bit of money up front for building the pipeline through greece. one of the reasons why we know he is here. matt: i don't know sometimes if i mean too cynical but it seems like a pretty obvious theatrical power play by sippers -- alexis tsipras to make it clear to the eu that he may go somewhere else if they don't back them up.
ryan: that is true. if you think long game. russia has $36 billion in reserves -- they want to increase those reserves. you look at the oil price, low 60's for brent. that's below what russia needs. if they were to pull a bunch of money in greece right now or if they were hoping to use russia as a trump card to gamble with the european union, i don't really see that happening. that's more russia helping greece. i caught up with the economy minister here the other day. do you see this happening? sure, we can have deals. the idea that you would actually buy their bonds or help them out on a larger financial extent, i
don't see that happening. olivia: we have a piece of that sound from your interview with the finance minister. >> of course, there could be some deals. if they decide on the pipeline, we can guarantee some credit. olivia: i suppose my question would be -- it sounds like the potential strategic partnership that sounds more like a business concession. can russia even afford to bail out greece? ryan: in the short term, the answer is no. maybe alexis tsipras is thinking longer game here. you are astute russia watcher would say we heard the same kind of conversations about russia
bailing out cyprus or iceland. that did not happen. that doesn't mean that russia can't help in other ways. and that greece cannot be helpful to russia. there are 28 countries in the european union. all 28 have to agree on sanctions against russia if they will stay in place. they just did that yesterday. there's a sanctions will come up for renewal down the road. maybe one of these days if the russians helped the greeks in a small way, the greeks will return a favor in a big way. that's probably more with this trip is about. never underestimate the power of vladimir putin to surprise everyone. matt: there are a few more astute russia watchers than you. oil doesn't stay at $60 a
barrel, we all love to drive. it could be $100 in the year. not everything has to happen in the next two weeks. the longer-term view is still a very important one to think about. ryan chilcote joining us from st. petersburg. sure we will hear a lot more from you throughout the day. thank you for joining us. olivia: i want to get out to vonnie in the newsroom. >> we are seeing an increase of .4% month over month in may. economists were looking for an average of .5%. we were expected to rebound -- expecting a rebound. that was enough to do nothing for the year over your number. that was stagnant. absolutely no change. let's get to the course, food and energy.
the federal reserve looking at those inflation numbers. let's get the initial jobless claims. to her 67,000 claims last week. -- 267000 claims last week. we are not seeing too much we market reaction yet. they continue to make smaller gains. the two-year not moving olivia: -- more good news on the labor market. we've accreted over a million jobs. -- created over a million jobs police and trust and are searching for the man who killed nine people in a historically black church last night. the suspect is described as a white man between 21 and 25 years old. police called the killings a hate crime. he attended a prayer meeting for almost an hour before opening
fire. another loss for ellen pao. she must now pay her former employer to earn zynga $5,000 in legal fees. -- $275,000 in legal fees. >> i'm sorry this happened to ellen, that it happened to us. this is not a question of guilt. it's a civil case. the jury found we are not liable after 5.5 weeks of testimony. olivia: you can see the entire interview tonight at 7:00 right here on studio 1.0 -- 7:30. matt: prosecutors and attorneys for dennis hastert will be back in court today. they will try to determine how the hush money case against him
will proceed. he is charged with violating making rules and lying to the fbi. he had planned to pay 3 million -- $3.5 million so the allegations of sexual misconduct years ago would not come out. the $10 bill will be getting a bit of a facelift. it will feature the first woman on a the nation's currency -- hamilton is not completely out. he may still end up appearing on some of the $10 bills. i feel at the susan b anthony dollar was more recent than a century a go maybe the first woman on paper currency. olivia: the treasury has an a website where you can go and dominate the woman you think deserves to be on the new $10 bill. matt: it has to be someone who
is no longer with us. olivia: it cannot be betty white. matt: for oprah winfrey. olivia: it has to be somebody who represents inclusive democracy. matt: we've already had martha washington. abigail adams would be a great choice. olivia: much more still to come. we will look at fit bit's wall street debut. they will begin trading today. can the company keep growth on track or will it end up being just another fad? will it go the way of blackberry? ♪
they raced $732 million, valuing the company at $4 billion. leslie baker joins us now. be sure to catch the interview. we've seen a lot of ipos. they do quite well in the opening days. six months later, different story. what is the biggest risk to the start of trading for fitbit today? leslie: fitbit as that consumer appeal. we still see a lot of retail interest. they go and buy the stock because they own it and love it and want to own a piece of it. that is why we see so many of these -- the consumer tech names like etsy and box. olivia: or shake shack. i love those fries. i will buy stock. leslie: it's a risky proposition. when things do go wrong and you
have a lot of retail investors in the stock we do tend to see more panic selling. olivia: are these the tory burch fitbits? why is there so much demand? leslie: it's a remarkable story. when this company started its roadshow on june 2 they were targeting to our $50 million less -- $250 million less. why such a demand for fitbit? this is a company that is growing incredibly rapidly on the revenue side. it is profitable. $100 million in profit. $1.3 billion in sales this year. investors looking for a tech
company, that's very attractive. matt: they will double sales basically. does the outlook look like it will stay that way? olivia: my big concern for fitbit they are coming to the market at a time when most powerful tech companies in the world are in the game. leslie: on the high-end, they have apple with the apple watch. then, on the low end competition from xiamomi. if you say you lose your fitness tracker or it stops working, you can buy a cheaper one. the price is difficult to ascertain. how you can get them to purchase more and more activity trackers. fitbit has to find a way to keep
its customers with its product and when they upgrade to new products, to keep them within the fitbit family. matt: you are about to head down to the new york stock exchange. leslie: i want to make it to the opening bell. matt: you will interview the seo. we will have that live at 10:30 a.m. coming up kroger is giving whole foods a run for its money. what are they doing to keep things fresh? mike shaaban with us, next. ♪
first-quarter earnings, beating on the bottom line, but falling short on revenue. it raised same store guidance -- mike is the chief financial officer at kroger. thank you for joining us. let me ask you about the myth you made -- in q1. what are you doing to boost sales and what kind of growth would you like to see? mike: we don't feel as though we missed on the top line. our strong sales and 5.7% without fuel would be far above what anybody was inspecting us to generate this year. take fuel outcome of we are up over 6% of total sales. it's purely the fuel volatility.
each one of those gallons was sold at a lower price. we delivered -- over delivered a bit. matt: we are showing same-store sales chart that shows the run rate slowing down a little bit quarter after quarter after quarter. from 6% in q4 2014 to 3.3% -- the chart is going in reverse. mike: we had a great fourth quarter. a 5.7% in the first quarter. we are thrilled with our top line. we wake up everyday try to please our customers. based on our unit growth, we feel like we are doing a phenomenal job with that. olivia: i will agree with you. you have had 45 consecutive quarters of sales growth.
your margins at the highest level since 2010. at a time when we have seen the whole spectrum of the u.s. grocery market wobble. everything from walmart to whole foods has seen their sales growth actually start to decelerate a little bit. what are you guys doing so right? mike: we pay attention and understand what our competitors do. we focus on our customers. our insight with our new relationship -- we understand what our customers are doing today and try to project what they want in the future. we do try to focus on the customer, deliver more for them every day. we have friendly associates and fresh products and try to keep them coming back and get a better share of everyone. that is how we go to business every day. matt: how important is diverse a vacation? -- diversification? you have jewelry stores.
mike: we have jewelry stores several hundred convenience stores as well. we have 37 manufacturing plants. that helped a lot this year as milk prices went down. we were able to pass on the lower prices to our consumers. it's a very elastic category. it's not just diversification through those different kinds of businesses, we have diversification within our regular supermarket stores. we can tailor each one to the neighborhoods and customers that shop in those stores. each store is a little different. olivia: how do you see the opportunity in digital? what's more important? the click and collect model or the delivery? mike: our ultimate goal is going to let the customer decide how
they will interact with us. we have the click and collect in cincinnati. we are learning a lot about that from harris teeter. we merged with harris theater early last year. we also merged last fall with by dacosta.com -- vitacost.com. it's all about trying to integrate all three of those. we started this journey more on the digital side with getting households engaged with ads and downloading coupons. it took over four years for the first billion and 15 months for the second million to be downloaded. it's getting the households more comfortable overall with that kind of shopping experience. matt: the stock chart doesn't
lie. they are doing something right in cincinnati. thank you so much for joining us . i will practice reading charts. olivia: still to come, much more common including one of our top stories of the day. greece is on the brink. christine lagarde digging in their heels -- we will get the latest from luxembourg next. ♪
matt: we have some stocks on the move ahead of the open. julie hyman joins us now with all the analyst action you need to know this morning. starting with a debate over whether the fed will raise rates. julie: even after the fed trying to offer some clarity, jenny ellen trent lott for some clarity, people are more confused than ever.
-- janet yellen trying to offer some clarity. matt: the fed will remain data dependent. the pope is catholic. julie: we've had some strategists flip-flopping. they heard the same speech, the same commentary yesterday. yet, they came to different conclusions. talking about the folks at citigroup and goldman sachs. at citigroup, they say the rate increase will happen in september rather than december. william lee says the case for september interest rate normalization gets stronger but be prepared for rate volatility. the folks at goldman sachs say no, it will happen in december. they flip-flopped their perception. they say 70 fmc participants -- fomc participants are projecting rate hikes this year.
-- seven fomc participants. they believe jenny ellen herself is projecting zero or one this year. what you're are looking at behind me is the fed funds futures. the probability they're pricing it. the probability of what we will see a rate increase. 46% chance priced into the market that there will be no change. a 54% chance that there will be a change. there are some folks who see we will -- say we will see a quarter-point hike. the folks who think it will be 25 basis points and then maybe it's going to 50 basis points. you see the distribution changes as it goes out as well. pretty interesting here that we've had all these numbers
given yesterday. olivia: i did not realize that the majority think there will be a rate hike in -- there still is this significant gulf between the dot plot and fed fund futures rate. matt: we will talk trade foreign affairs and more with chris coons. peter cook will be talking to him and the nations capital. -- in the nations capital ♪. ♪
announcer: live from bloomberg headquarters in new york. this is "market makers," with erik schatzker and stephanie ruhle. matt: good morning i matt miller. olivia: i'm olivia sterns. it is my lucky day to be here with matt miller. matt: i look at top stories. the fbi has joined the hunt for the man who opened fire in a black church in trust in carolina -- in charleston, north south carolina. the suspect has been identified as a white man in his 20's. police released the surveillance
camera photos. they say he attended a prayer meeting at the church for almost an hour before opening fire. authorities are calling it a hate crime. >> this is an unspeakable act. somebody filled with hate and with a deranged mind. matt: authorities say they thought they tracked the suspect but he then got away. another sign that inflation may take time to reach the fed target, the cost of leaving -- the cost of living rose 1/10 of 1% in may, the smallest gain this year. the consumer price index rose 4/10 of a percent thanks to hire fuel costs -- thanks to higher fuel costs. olivia: i do not know about you but i don't stay with airbnb
yet. evaluation of $24 billion. that would make the start up one of the world's most valuable private companies. airbnb is projecting that revenue this year will be $900 million, almost four times what it was two years ago. for the first time in more than 40 years, mcdonnell's says the number of u.s. run drives -- mcdonald's says the number of u.s. restaurants it has is shrinking. matt: leaders meet in luxembourg as they try to make a deal with greece but some members are not optimistic that anything will go through. >> i have one job to do today to see whether we can bring that deal with greece closer. it requires further steps from the greek sides. we need to have a solid deal
that holds up in the coming years. that is what we will discuss today. i am not sure whether we will make progress. matt: hans nichols is in luck him -- is in luxembourg. i think earlier i heard you say low expectations. hans: expectations are exceedingly low. we have been talking to all these finance ministers heading into that meeting and they were lowered further by matt i'm regard -- madam lagarde saying there will not be a great period for greece to pay back the money they oh. he helps the imf would stay involved in europe. that could be a sign that the imf is so fed up they may be leaving if not these negotiations, this terrain. we heard from the greek finance
minister and he made the point that they would be bringing government ideas to the table that is not to say they will be showing up with fresh proposals. creditors have been uniform on this and consistent there will not be a deal to rescue greece. olivia: we calling this a last chance summit. is that true if there is no deal today is a technical default next? hans: normally i would say there is a -- there is never a last deal summit anytime we are discussing greece. this time, there is a leader summit on june 25 and 26th when leaders will come together to provide some sort of consensus. even on that front, there is not a lot of optimism. olivia: the tone is changed. creditors all sounding more skeptical that a deal will get done. how much closer have that sides
come in the past two weeks? hans: it does not seem like there has been any movement. an article this morning the greeks are clear that they will not reform their pension and creditors are clear that pension reform needs to be done. they are apart on policy. it seems like there is a lot -- there is a lack of trust that previously had been -- among eu officials. they seem to have lost confidence that the greek government is playing it straight. olivia: you have to have some sympathy for the greeks in this case because the imf forecast they said greek gdp is going to shrink by 5%. it ended up shrieking by 25% -- shrinking by 25%. matt: alexis tsipras is pleading
his case in the german press. he is no favorite of your average german joe. hans: to get a sense of citrus -- of alexis tsipras' challenges, angela merkel made the point that they had given quite a bit of money for greece and there were hisses in the audience. that could have been from the spd opposition. references to the greeks are being met with hisses or jeers gives you a sense for how far south the relationship, at least greece's standing in the german public has fallen. matt: hans nichols in luxembourg. coming up, technology that makes processing tens of thousands of
matt: a view of new york city on this thursday in june. a hot day every day for the rest of the summer here in new york. companies like boeing model airflow for the 777 jet and paypal to secure hundreds of thousands of transactions per second. a company based in israel and sunnyvale california announced a new technology that would make processes faster. the ceo joins us now on set.
what exactly -- how does your technology differ from competitors? >> thank you for inviting us. if you think of what is happening today data is growing exponentially and every day you have more applications producing more data. what you need in the infrastructure is the ability to move analyze and make decisions according to this data. the faster you move the data the more efficient your data center is. what we have announced yesterday is an endpoint and a switch that can run data from 25 to 100 gigabytes per second. it'll make people like paypal able to do fraud detection identity theft and other things in real-time very fast. olivia: what are the speeds your competitors run at? eyal: i think the fastest people have today is about 10 gigabytes per second. today we are shipping 40 per
second. in q3 we will move to 100% and. -- 100% and per second. companies like facebook google -- cloud 2.0 is the next stage of being hyper converged platforms into the cloud. you have the storage and computing in the same platform. matt: making your cloud experience seamless as if you had the data on your flash drive with your device but you can store it on the cloud. who are your customers now and who are the customers you are targeting? eyal: today, we have four out of the largest web two guys. the largest we can mention is microsoft. what we want to do is enable them to process more data. you want to have -- you will not
have traffic congestion's. you will illuminate crime before it happens. matt: minority report. olivia: a note pointing out whether have a hold instead of a buy on your stock, citing the potential threat of intel vertically integrating. according to this analyst, it seems that -- what is your biggest challenge? eyal: our own execution. olivia: supply chain issues? eyal: by the not think we have any supply chain issues. our execution means designing the products and getting them through production. ethically executed we take the market. i believe we are a generation ahead of competitors and i believe we can maintain this gap moving forward. olivia: people say you are right
for a takeover. matt: i was going to say the same thing. olivia: have you had any calls? eyal: we have had multiple calls in the past. i believe we can grow faster being an independent company and being part of a larger company. matt: excellent. we appreciate you coming in. eyal waldman ceo of mellanox. olivia: much more including president obama's trade deal. we will ask one of the democrats who supports the president's trade agenda. senator chris coons. ♪
the midwest is being hit by heavy rain in the wake of a tropical storm. authorities say flooding is likely. more than 11 inches of rain fell near houston, texas. a rockslide caused by a rainstorm closed one of oklahoma's busiest highways. warrant buffing -- warren buffett is increasing his stake in h.j. heinz. buffett was able to add a stake for a penny a share under a deal when berkshire hathaway and 3g capital took the company private. facebook's mark zuckerberg and his wife gave $5 million to a scholarship bond called the dream u.s. the money will benefit more than 400 san francisco area students over the next five years. president obama's trade agenda may get second life despite the
opposition. the house will vote to give him fast-track trade authority. peter cook is standing by with one of the few democrats who actually supports it, delaware senator chris coons. peter: thanks. i'm joined by senator coons who met with the president yesterday along with other pro-trade democrats. what do you make of this new strategy? are you prepared to cast another tough vote? sen. coons: this is a difficult and unclear path forward. it is my understanding that the house is voting on tpa today. many of us who supported tpa among the democratic caucus believe we should be moving forward customs and taa and that the better -- the help for workers who would be displaced. what many democrats want to see is stronger enforcement and
stronger support for workers who might be negatively affected by trade without some path forward for all of those to get done it is difficult for me to take another vote on tpa. peter: you need assurances that they will allow votes and work actively to get the votes to pass them. sen. coons: at least. peter: you do not have that? sen. coons: not to my satisfaction. peter: how divided are democrats right now? sen. coons: the president was surprised by the rejection of taa in the house and trying to come up with a strategy that can get support for displaced workers, stronger enforcement and tpa which would allow him to finalize negotiations on the transpacific partnership. a number of us advanced concerns about the african growth and opportunity act which would be the vehicle for sending taa back to the house. it is a complex situation but i
think there is a possible path. peter: you have taken some heat from supporters for your vote on trade. tell me why it is you are convinced this is in america's at interest? . sen. coons: understandable skepticism about the impact of globalization on trade. what i have seen in my years in the senate is that china is rewriting the rules of trade in a target for century in ways that are not good for america's interests for labor, human rights, the environment. tpp gives us the opportunity to rewrite rules in our favor in a direction that advantages america has priorities. peter: if the president gets tpa, no doubt in your mind that the deal moves forward? sen. coons: he will conclude
negotiations. it is not clear whether it will get approval in the senate. it makes approval more likely. my vote for tpa does not guarantee my boat for tpp. peter: is this going to have lasting damage for democrats? sen. coons: i don't think so. there are lots of other issues that remain ahead for us to work together on in the last 18 months of his presidency. peter: the new $10 bill being announced by the treasury secretary. what are your thoughts on this? the first woman to be on u.s. currency since martha washington . sen. coons: my wife and daughter were excited about an online campaign my daughter brought to my attention asking for activism in support of a woman on the $20 bill. input on whether it should be harriet tubman, error -- eleanor
roosevelt. i'm looking forward to consulting with my daughter for advice. peter: ties to delaware would be helpful. sen. coons: absolutely. peter: i appreciate you joining us. big boat in the house on trade. -- big boat in the house on trade -- vote in the house on trade. matt: barney frank has been a longtime critic of the banking system. now he is joining the board of a bank. that story, next. ♪ ♪ ♪
accept not. olivia: we are a few minutes away from the opening bell on a cloudy, 70 degree new york city. i'm olivia sterns, here with matt miller. i'm also here with -- they both made it in despite the humidity. what is moving markets today? tracy: i want you to focus on a dot. you can see a bit of movement. these show interest rate projections from 17 fomc members. there were three dots they were saying were either going to be one or no rate hikes. the rumor on wall street is one of those new dots might be janet yellen. we're goldman sachs --
matt: she thinks there will be one or none. tracy: different from the hikes people were predicting. goldman sachs is predicting the first rate hike will come out in december and they think that yellen might have changed her position. olivia: we know that before people think there will be one rate rise the last time we did the. plot. -- the dot plot. matt: on the one hand they say data dependent on the time. on the other hand, i feel like there is an implicit promise to the market that we would do at least one rate hike to normalize rates this year. oksana: the fed has continued to do what it said it would do. it is going to take -- the data
continues to be conducive to having at least one rate hike this year. whether one of the dots is a yellow dot or not, we can spec it -- a yellen. or not, we can speculate. things that have nothing to do with the fed, purely on less fed data in europe. it is not outside the realm of possibility that yellen wants to be measured. at the end of the day, i'm going to offer a different perspective to say that it does not really matter. this is happening. matt: we will continue to speculate. tracy: the next chart five-year greek cds. insurance policies on greek government debt. the two lines that you saw on that chart are the bid and ask
spreads for greek cds. those are widening which means that the market is getting liquid. it means the cost of transaction in greek cds is glowing -- is growing. matt: how much would you charge to ensure my greek debt at this point? oksana: i do not think -- matt: i want -- olivia: i want to meet a day trader of greek cds. oksana: there is a price for everything. there is a market -- there are opportunities when the price is right to take the risk. if a market is paying you a ridiculous amount of money to insure greek debt for the next five days, would you do it? tracy: there was a great rumor a
few years ago when the euro zone crisis started saying that greek banks were selling cds protection on greece. if they have to pay out on protection, they are all bust anyway. matt: let's get to barney frank. tracy: possibly the least likely person in the world to ever join a bank has joined the bank. he is joined a midsized new york bank. barney frank was a key architect in the dodd-frank regulation which was the sweeping repainting of the u.s. financial system. matt: they get somebody who wrote the rule. tracy: the weird thing now is there is talk about dodd-frank in general. we have the treasury secretary yesterday saying -- matt: this is precisely -- olivia: this is precisely the side bank -- the size bank
dodd-frank is most difficult. olivia: it is a smart higher. re. i want to get to julie hyman. julie: watching earning reports. a lot of disappointment surrounding the numbers for oracle. the company in the premarket had been falling sharply and that is after earnings and sales missed estimates because the currency affect was more onerous than analysts anticipated. the company is seeing sagging sales to new and existing customers as people are moving to making that transition to the cloud. oracle is seeing higher expenses than anticipated. shares have been trading lower. olivia: down 7.5% and falling as we speak.
julie: take a look at rite aid. those shares have been falling after earnings. the company coming out with earnings that missed analyst estimates saying that it's prescription softness that was a problem during the quarter and that may continue for the remainder of the year. i want to bring back at fed funds probability chart. i want to talk about the interpretation of it. the range of the fed fund target is 020.25%5%. there is no chance being priced in of a rate increase -- a july rate increase.
this structure for placing -- pricing this probability has been called into question. matt: nobody is predicting a rate increase. it would make sense if the state that if the fed stays data dependent why would they raise rates this year? oksana: there was the unemployment number that was going to hit 6.5% and is now lower than that. they have removed the ability to be flexible and keep moving the goalposts. a lot of indicators there watching our better at this point. -- are better at this point. gdp growth is also coming off of a week number that we had earlier in the year. olivia: a contraction.
oksana: also, we are seeing -- the one data point yellen has been focused on is the wage number. i think that makes are less likely to keep pushing this out. the fed is out of bullets at this point and they do not want to find themselves in a market cycle that is starting. we are in the 70 year of this expansion. -- we are on the seventh year of this expansion. olivia: we have some breaking news. restoration hardware has been -- trading has been halted pending news. we will keep an eye on that. what was your overall take away from everything we heard yesterday? the market read it as dovish. yields went lower, the dollar sold off.
when you look at analyst notes, you saw goldman sachs pushed the likelihood of the rate hike to december. oksana: i think the fed is going to continue guiding as long as we do not see any meaningfully worse data coming out with respect to the u.s. economy. on track for 25 basis points by september. i will offer a different point of view because at the end of the day whether we say interest rates are poised to rise the point is that fixed income today has never been less equipped to offer the three things why investors hold. fixed income has never been last besler -- less equipped. the industry answer has been unconstrained bonds.
a lot of these treasuries have taken on a lot more equity correlated risk by trying to grab yields because that is what investors want. matt: a lot more risk across the board. olivia: is that what you tell clients to do? oksana: the idea of diversification needs to be re-examined. we are dealing with portfolios where there is a lot more equity risk than ever. if you look at what happens when -- when you buy a bond you are taking on risk and a number of other default risks. interest rates are what got you out of trouble. that is a less powerful force. the idea of diversifying by continuing to go long sectors
globally does not work because you are reinvesting in the same type of risk over and over which has a lot more correlation to the rescue -- the risky part of your portfolio. olivia: what do you do? oksana: the idea is to step out of that long only mindset. the extent that you have credit risk how would you mitigate the downside? thinking about hedges uncorrelated returns on the market, private markets alternative strategies. this market is constrained with respect to liquidity. investing in less liquid parts of the market if you can really work with that type of investment horizon, there is previewed to be had -- premium to be had. barney frank was one of the architects for the regulation that has put us in this significantly more strained liquidity market.
that is a topic investors have to think about today. the market-making ability on the street has plummeted. you have etf's, the top five are total assets under management. what does that mean for this grab per yield we have seen? the other turned in the market we have seen is a move toward the short end of the in an attempt to feel you are more protected from interest rate risk. when the fed does go, it will be that front end of the curve that will be the most exposed. olivia: the utility of buying treasuries -- matt: we are getting a lot of amen sisters on the peanut gallery. iq for joining us. -- thank you for joining us. ♪
matt: turning back to jimmy lee, jimmy -- jpmorgan's vice chairman who died at the age of 62 yesterday. joining us is steve dellinger. they worked together on the burger king ipo in 2006. we are trying to get a sense of how jimmy was as a person. we know how important he was on wall street. his legacy making deals. what about jimmy as a friend? what can you tell us about jimmy's life? steve: we worked with jimmy for 25 years and have seen jimmy in many different venues as a friend and advisor. his life outside of work was the
same inside of work. he was passionate and dedicated to what he did and he lived his life to the fullest. jimmy brought energy to any projects he was involved with. he was a great golfer. he had a love for life and intensity unmatched by many people and we loved him for that. olivia: we are hearing about how jimmy was an old school rainmaker who are should in a new era of american capitalism. how would you describe the legacy he will leave on finance? steve: not many people that have done as much as jimmy has. ushering in major private equity. jimmy had the full skill set and helped build jpmorgan into a powerhouse. a vital part of american
finance. this is very shocking that he is not here. every day you wake up and jimmy was involved in another project and helping build companies drop the world. -- throughout the world. olivia: that is a sentiment we have heard echoed from his friends. matt: how did this guy manage -- he seemed to prioritize his family and families of his friends. his personal life, very important to him. he was constantly doing business , flying from one place to another making deals. it has to make your head whirl. olivia: jamie dimon put out an e-mail yesterday with a video of jimmy lee and in it he says the last piece of advice he gives is , you have got to put your family first and the way you do it is you have to be organized. put those soccer games and teachers meetings up there with meetings with the ceo.
tell us more about what it was like working with him. we had bill cohan on earlier who said he was built for making big deals. steve: having a handle on the ups and downs of any kind of deal. i worked for him on many deals. he was part of one of the largest ever done in terms of financing. jimmy was skilled at eating able to focus and keep a lot of balls in the air -- at being able to focus and keep a lot of balls in the air. i think he focused on his family at the same time, which was a huge testament. i think he lived his life how he wanted to live it. he made a difference both in his family and the company he worked with.
it is a sad day. matt: thank you for joining us. steve pagliuca, friend of the late great jimmy lee. let's check in on top headlines. the mers virus surfaced entire in -- in thailand. south korea is still fighting an outbreak. the death toll rose to 23. another sign that inflation may take time to reach the fed's target. the cost of living excluding food and fuel rose 1/10 of a percent in may. the consumer price index rose 4/10 of a percent. fewer americans filed for unemployment benefits last week. employers are optimistic demand will pick up and are holding on to the workers they have got. in a few minutes the world's best golfers will tee it up at the u.s. open.
the chambers bay course in washington state. one of the favorites is rory mcilroy. he has stumbled after winning three events this year. play continues through sunday. that is what i will be doing this weekend. olivia: watching golf? ongoing tensions. can anything be done to spark life into russia's the economy? we are going like to st. petersburg. ♪
wonderful to see you. i want to hear about your takeaways from this conversation . how honest these think they were being? how candid where they being about the depth of the slowdown in russia and the challenges the economy faces? constantine: they were honest in intention. they intended to talk openly on the problems. i think what is needed is there specific set of concrete steps which should be made in order to overcome the crisis which russia is now sinking within deeper. some of the speakers said the positive news is that the
numbers which we use how -- the numbers are better than expected. this is a relative way to measure success story. the lack of information about how to attract investments which tended to be zero and russian economy. through investments, you can solve the problem which is now the basic russian economic strategy. since we never heard about the substitution as the economic miracle, there are doubts that this time substitutions without investments -- short of touching
the real issues. olivia: you are there with the biggest business leaders in russia. does president putin listen to influential businessman? en? konstantin: russian businessmen like to come here because they like to understand horizons of what the government is going to do. maybe in the course of the forum the horizon will become closer and more clear to them. so far it is unclear what will be the answer to russia pass economic -- russia's economic policy.
olivia: quickly, what is your assessment of how much damage sanctions have done to the russian economy? konstantin: could you ask again? olivia: how much damage do you think the western sanctions have actually done to the russian economy? plenty of its own problems from the fallen energy crisis to inflation. i want to know how much damage you think western sanctions have done. konstantin: actually, if we talk about the dimensions of damage by the end of 2015, russian private companies and banks will have to repay $143 billion of debt. it appears about half of that
stella: -- scarlet: tidbit is minutes away from its first trade. we will have a live interview with the ceo. matt: janet yellen signals a september rate hike remains likely. scarlet: using the principles of mathematics to interpret everything from politicians promises to student loan debt. scarlet: good morning, i'm scarlet fu. matt: i matt miller. mike mckee is in the newsroom with the headlines. mike: imagin